Aus housing
The good news is that house prices are falling at a slower rate than before, dropping 1.1% month on month.
They are falling quite sharply in Brisbane…
…which is also where they rose the most (note, “most” doesn’t mean most expensive, or even most over-other-time-frames, it just means on this series, indexed at one, measured from just prior to the pandemic).
We continue to view housing as the “Achilles heel” of Australia, noting that we are highly leveraged, at the household level, and, greatly exposed to changes in interest rates through predominantly variable rate mortgage exposures (great for banks, in the short run at least).
We reflect this via a preference for international shares, over domestic equities, at the DAA level, noting that at the moment the Aussie market is enjoying a reasonably solid tailwind thanks to the China reopening story (which is driving commodities, in particular, which we have lots of, in the ASX 200).
We also aren’t holding the home builders (across REITs, and building material stocks) and have fairly modest retail exposures, viewing most of them as over-earning and over-stocked, coming into Christmas.
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Please note that past performance is not a reliable indicator of future performance.
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